Chapter 7 Network Analysis | Business | Mathematics

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UNIT – 6

PROJET MANAGEMENT (PERT/CPM)
Net work analysis: It is refers to a number of techniques for the planning and control of complex projects. The basis of network planning is the representation of sequential relationships between activities by means of a network of lines and circles. The idea is to link the various activities in such a way that the overall time spent on the project is kept to a minimum. Features of Network Analysis: Logical base of planning: Network analysis is highly applicable at several stages of project management right from early planning stage of selecting right option from various alternative to scheduling stage and operational stage. Simple in nature: Net work analysis is straightforward in concept and can be easily explained to any laymen. projects computers can be used. Improves coordination and communication: The graphs generated out of network analysis display simply and direct way the complex nature of various subdivisions of project may, quickly perceive from the graph Wider application: The network analysis is applied to many types of projects. Moreover, they may be applied at several levels within a given project from a single department working on a sub-system to multi-plant operations within corporation. Gantt’s bar chart: Before PERT and CPM were developed, Gantt charts and mile stone charts were used tools to monitor the project progress in complex projects. Gantt chart is a bar chart, which was developed by Henary Gantt around 1900. It is consists of two coordinate axes, one represents the time and the other jobs or activities performed. Data calculations are simple and for large

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A B Activities in job x C D E

5 days 5 days 4 days 7 days 3 days

Duration of time The above figure shows job x which contains five activities ABCDE the different time durations activity A is an independent activity followed by activities B, activity B is followed by activity C, activities D, E have no such sequence. Activities C,D and E reach completion together. However the total number o day taken for completing the job is 14 days. Limitation of Gantt Chart: 1. This Gantt bar charts not useful for big projects, consisting of large number of complex activities 2. It does not show the relationship between various operations. It is very difficult to find the sequence of various operations on the Gantt chart or the most probable date of completion. 3. Does to indicate the progress of work 4. It cannot reflect uncertainty or tolerance in the duration time estimated for various activities 5. It simply a scheduling technique, but not effective planning tool. Milestone chart: Milestone chart is an improvement over Gantt chart. It has becomes a good line between Gantt chart and PERT and CPM network. Every task represented by a bar in Gantt’s bar chart, is subdivided in terms event or point in time.

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Network analysis undergone several changes and many variants exist. probabilities and combinations of all these factors.jntuworld. www.jntuworld. resources.net A B Activities in job x C D E 1 3 2 4 5 7 8 6 9 5 days 5 days 3 days 7 days 11 10 4 days Duration of time In the Gantt’s bar charts bar representing an activity is divided into certain milestones. and consecutively numbered such a breakdown enhances the awareness about the inter dependencies among all milestones. in handling the basic factors like time.jwjobs. which evaluate the randomness due to imperfection in all human and physical systems.www.com . cost. They are identified with a major event. PERT and CPM continue to be very popular.com www.

It involves determining an optimum duration for the project. www. CPM involves a trade-off between costs and time. CPM: Critical path method assumes that the time required to complete an activity can be predicted fairly accurately. It may be a small or big project.com .com www.www. ship repairs and other such as large operations Development of new weapon systems and new products and services Manufacture and assembly of large items such as aeroplanes or ships repairs and other such as large operations Simple projects such as home remodeling house keeping or painting and so on. Application of PERT and CPM: Construction of projects such as building. houses or bridges Preparation of bids and proposals for large projects such as multipurpose projects Maintenance and planning of oil refineries.net PERT AND CPM: PERT: Programme evaluation and review technique (PERT) is a tool to evaluate a given programme and review the progress made in it from time to time. Since time is an important factor. and thus. highways. marriage. the costs involved can be quantified once the critical path has been identified. a minimum duration that involves the lowest overall costs. PERT Basic Terminology: Event: A event is specific instant of time which indicates the beginning or end of the activity event is also known as a junction or node. It is represented by a circle and the event number is written with in the circle. It is concerned with estimating the time for different stages in such a programme or a project and find out what the critical path is. that is. picnics etc. roads. A programme is also called a project. which consumes a maximum resources. A project is defined as a set of activities with a specific goal occupying a specific period.jntuworld.jwjobs.jntuworld. such as construction of a college building.

net Tail event Head event Predecessor event Successor event Activity: Every project consists of number of job operations or tasks which are called activity. - An event An activity An event In a network diagram critical activities are those which if consume more than their estimated time. 2 Dummy Activity 1 3 4 5 www.jntuworld. even if they consume a specified time over and above the estimated time.www. It shown Non-critical activity: Such activities have a provision of float or slack so that.com . Dummy activity: When two activities start at the same instant of time like A and B the head event are jointed by dotted arrows and this is known as dummy activity.com www.jwjobs. Ex: Start machine installation Machine installation Completion of machine Classification of activities: 1) Critical activity 2) Non-Critical activity 3) Dummy activity Critical activity: with thick arrow. the project will be delayed.jntuworld.

If a path has zero slack that means it is the critical path. Slack = LFT – EFT Earliest Start Time (EST): It is the earliest possible time at which an activity can start. Free float = EST of Head Event – EST of Trail Event – Activity duration or LFT – EFT Free float refers to the time by which an activity can expand maximum time available to finish the activity and the time required to complete it.com . LST = LFT – Duration of the activity Latest Finish Time (LFT): It is the latest time by which the activity must be completed.com www. float is use with reference to activity.jntuworld. It is calculated by moving backwards. Earliest Finish Time (EFT): It is the earliest possible time at which an activity can finish EFT = EST + Duration of activity Latest Start Time (LST): It is the latest possible time by which an activity can start without delaying the date of completion of the project. www.net CPM Basic terminology: Critical Path: Critical path is that path which consumes the maximum amount of time or resources. Floats are three types: 1) Total float 2) Free float 3) Independent float 1) Total float: It is the additional time which a non critical activity can consume without increasing the project duration. Total float = LST – EST 2) Free float: without affecting succeeding activities. It is that path which has zero slack value. Float: Floats in the network analysis represent the difference between the The basic difference between slack and float times is a slack is used with reference to event. Slack: Slack means the time taken to delay a particular event without affecting the project completion time. So that the scheduled date for the completion of the project may not be delayed. and is calculated by moving from first to last event in the network diagram. However total float may affect the floats in previous and subsequent activities.jwjobs.jntuworld.www.

com www.jwjobs. Activity Preceding activity Duration A 4 B A 6 C B 5 D A 4 E D 3 F C.com .jntuworld. Draw the network diagram and calculate EST.www. 4. LST.jntuworld.net 3) Independent float: This the time by which activity may be delayed or extended without affecting the preceding or succeeding activities in any away. 6.E 3 Solution: 10 B 10 3 5 C EST LFT 0 1 0 4 4 2 4 6 15 5 15 F 3 18 6 18 A D 4 3 E 4 8 12 Critical path = A-B-C-F Project duration = 18 days www. 3 and 3 days respectively. Independent float = EST of Head event – LFT of Trail event – Activity duration Problems: 1) A small engineering project consists of 6 activities namely ABCDE & F with duration of 4. EFT. Mark the critical path and find total project duration. 5. LFT and floats.

jntuworld.jntuworld.com www.jwjobs.www.net Activity Duration EST LST EFT LFT A B C D E F 4 6 5 4 3 3 0 4 10 4 8 15 0 4 10 8 12 15 4 10 15 8 11 18 4 10 15 12 15 18 Total float 0 Free float 0 Independent float 0 0 0 4 4 0 0 0 0 4 0 0 0 0 0 0 Note: LST = LFT – activity duration LFT = EST + activity duration Total float = LST – EST or LFT – EFT Free float = EST of Head Event – EST of Trail Event – Activity duration Independent float = EST of Head event – LFT of Trail event – Activity duration www.com .

Solution: i) of Activity 1-2 2-3 3-5 5-6 1-4 4-5 to 2 1 0 7 3 2 tm 5 1 6 7 3 8 tp 8 1 18 7 3 14 te = t o + 4t m + t p 6 (Duration) S . Calculate EST and LFT and mark them on the net work diagram 4.net 2) A small engineering project consists of six activities. Identify the critical path and mark on the net work diagram 6. Draw the network diagram and mark te on each activity 3.D (σ t ) = t p − to 6 Variance ( iv ) = (σ t ) 2 5 1 7 7 3 8 1 0 3 0 0 2 1 0 9 0 0 4 www.jntuworld.D variance (σt ) and (v each activity 2.com www. Activity to 2 1 0 7 3 2 tm 5 1 6 7 3 8 tp 8 1 18 7 3 14 1-2 2-3 3-5 5-6 1-4 4-5 Find out: 1.www. Calculate total slack for each activity 5. Calculate the values of expected time (te).jntuworld. S.jwjobs. The three time estimates in number days for each activity are given below.com . Probability of completing project in 25 days.

σ = 1 + 0 + 9 + 0 = 10 z= 25 − 20 1+ 0 + 9 + 0 5 = 10 = 5 = 1.com .33 From the table value (z = 1.jwjobs.com www.50 3.net 5 6 2 0 1 3 4 3 5 0 5 1 6 3 6 EST LFT 7 23 5 13 7 20 6 20 8 Activity EST LFT LST EFT Slack 1-2 2-3 3-5 5-6 1-4 4-5 0 5 6 13 0 3 5 6 13 20 5 13 0 5 6 13 2 5 5 6 13 20 3 11 0 0 0 0 2 2 Critical path = 1-2-3-5-6 = 20 days Probability for completing project in 25 days: Z= t s − te σ Here ts = 25 days.jntuworld. te = 20 days.jntuworld.50) = 93.www.32% www.

If the project Project cost Indirect cost Project duration www.com . the concept of cost slope and how the optimum cost and optimum duration are ensured for a given projects while crashing. which are directly proportional to the number of activities involved in the project Ex: Raw material cost Direct cost Crash time Normal time b) Indirect cost: In direct cost are those costs that are determined per day.jntuworld. Project costs: Costs associated with any project can be classified into two categories a) Direct cost b) Indirect cost a) Direct cost: These costs are those. ads. we will discuss the concepts of direct and indirect costs. duration is reduced the indirect cost also comes down. supplies. depreciation.com www. These costs are directly proportional to the number of days of the duration of the project.jwjobs.jntuworld. interest an borrowings. rent. the relationship between project time and project cost.www. Some of examples for indirect costs are supervisory personnel salary.net Project Management – II Project crashing: In this chapter.

net Normal cost (Nc): It is the lowest cost of completing an activity in the minimum time. Crash time (CT): It is the absolute minimum time associated with the crash cost. CT = Crash Time OT = Optimum Time NT = Normal Time Project Cost O Total Cost (A+B) Indirect Cost (B) Direct Cost (A) CT OT NT Project duration www. assuming a given rate of increase in direct cost with a decrease in one unit of time. not using overtime or other special resource. Cost slope is defined as the additional cost for reducing one unit of time. but to save resources.jntuworld.com www. week etc.e. Normal time (NT): It is the minimum time required to achieve the normal cost Crash cost (CC): It is the least cost of completing an activity by employing all possible means like overtime. employing normal means i. organizations keep this extra expenditure at a minimum. Cost slope = Crash cos t − Normal cos t Normal time − Crash time CC Activity Cost NC CT Activity time NT S= CC − N C N T − CT Crashing of Network: After identifying the critical path. it is necessary to identify the priority to crash the activities by calculating the cost slope. Cost Slope: Cost Slope is the amount that has to be spent over and above the normal direct cost for reducing the duration by one unit of time (day.jwjobs.com .). additional machinery.www.jntuworld. proper materials etc. For reducing the duration extra expenditure to be incurred.

The total cost (A+B) curve is a flat U-shaped curve.www. which involves the least total cost.jwjobs. The time duration.jntuworld. Crashing the duration of a project may not be possible beyond a particular point. is the optimum duration at optimum cost.com www. with implies that only up to a particular point (O) the crashing is economical. as the project duration increase.net When the direct cost (A) decrease with an increase in time. insurance etc. depreciation. the indirect cost (B) like overheads.jntuworld. increases. not beyond.com . www.

work out the minimum duration of the project and corresponding cost Activity A B C D E F G Solution: Activity Job A B C D E F G EST Job 1-2 1-3 2-4 3-4 2-5 4-6 5-6 Normal time 10 4 6 8 8 6 10 Crashing time 6 2 4 4 6 2 8 Normal cost 400 100 360 600 840 200 1200 Crashing cost 600 140 440 900 1100 300 1400 Normal Crashing Normal Crashing time time cost cost (NT) (CT) (NC) (CC) 1-2 10 6 400 600 Cost Slope = 50 20 40 75 130 50 100 CC − N C N T − CT Priorities 1 1-3 2-4 3-4 2-5 4-6 5-6 LFT 4 6 8 8 6 10 2 4 4 6 2 8 100 360 600 840 200 1200 140 440 900 1100 300 1400 2 3 10 10 8 2 6 18 18 5 10 0 1 0 10 6 8 3 4 14 28 6 28 4 16 22 www.com www.com .jwjobs.jntuworld.net Problems: 1) Given the following data.www.jntuworld.

www.jntuworld.net Critical path is 1-2-5-6 and Duration is 28 days Total cost is = Direct cost + Indirect cost = (10+4+6+8+8+6+10) + 0 = 52/1-2 activity crashing by 4 days: EST LFT 6 6 8 2 6 14 14 5 10 0 1 0 6 4 4 3 4 10 8 12 18 6 24 6 24 Critical path is 1-2-5-6 and Duration is 24 days Total cost is = Direct cost + Indirect cost =(52 + (4 x 50) + 0) = 252/5-6 activity crashing by 2 days: EST LFT 6 6 8 2 6 14 14 5 8 0 1 0 6 4 4 3 4 10 8 12 18 6 22 6 22 Critical path is 1-2-5-6 and Duration is 22 days www.com .jwjobs.jntuworld.com www.

jwjobs.jntuworld.net Total cost is = Direct cost + Indirect cost =(252 + (2 x 100) + 0) = 452/2-5 activity crashing by 2 days: EST LFT 6 6 6 2 6 12 12 5 8 0 1 0 6 4 4 3 4 6 8 12 14 6 20 6 20 Critical path is 1-2-5-6 and Project Duration is 20 days Total cost is = Direct cost + Indirect cost =(452 + (2 x 130) + 0) = 712/Optimum cost = 712/Optimum Duration = 20 days www.com .com www.www.jntuworld.

) Crash Time (days) Cost (Rs.jntuworld.jwjobs. By using the given data calculate the optimum duration of the project.000 per day.2. Activity 1-2 1-3 2-4 2-5 3-4 4-5 Normal Crash Time(days) 4 2 2 5 3 2 Cost(Rs.com .) 1000 1500 500 1000 1000 800 Time(days) 3 1 1 3 1 1 Cost(Rs.) Cost Slope = CC − N C NT − CT Priorities 1-2 1-3 2-4 2-5 3-4 4-5 4 2 2 5 3 2 1000 1500 500 1000 1000 800 5800 4 3 1 1 3 1 1 2000 3500 900 4000 2000 1000 1000 1000 400 1500 500 200 1 2 Total direct cost EST LFT 4 2 2 5 9 9 5 4 2 7 0 1 0 4 2 3 3 6 2 4 www.net 2) The following table gives the information relating to a project.www.) 2000 3500 900 4000 2000 1000 Solution: Normal Activity Time (days) Cost (Rs. Where indirect cost is estimated Rs.jntuworld.com www.

com .www.jntuworld.800/1-2 crashing by 1 day: EST LFT 3 2 3 5 2 8 8 5 4 2 6 0 1 0 3 3 3 2 3 2 5 Critical path is 1-2-5 and Project Duration is 8 days Total cost is = Direct cost + Indirect cost = (5800+(1x1000))+(2000x8) =22.net Critical path is 1-2-5 and Project Duration is 9 days Total cost is = Direct cost + Indirect cost = 5800+(2000x9) =23.jntuworld.800/2-5(a) crashing by 2 days: EST LFT 3 2 3 3 2 7 5 4 2 5 7 0 1 0 3 3 3 2 2 2 5 www.com www.jwjobs.

the priority are changed according to the cost slope 4-5 activity having minimum cost slope.com .but duration is reduced by only one day. So it is suggested to crash the network by only one day.com www.www.300/All activities comes under the critical activities. 2-5(b) activity crashing by 1 day only EST LFT 3 2 3 4 2 7 5 4 2 5 7 0 1 0 3 3 3 2 2 2 5 Duration is 7 days Total cost = Direct cost + Indirect cost = (6800+(1x1500))+(2000x7) = 8300 + 14000 = 22.800/Here project crashed by 2 days and total cost incurred by the firm is 23.jwjobs. It can help to reduce the cost. So that 2-5 activity crashing by only 1 day.800/. Total cost = Direct cost + Indirect cost = (6800+(2x1500))+(2000x7) = 23. So that it is possible to crash out 4-5 activity by one day only and 2-5 by one day simultaneously www.net Critical paths are 1-2-4-5 and 1-3-4-5 and duration is 7 days only.jntuworld.jntuworld.

net 4-5 activity crashing by 1 day and 2-5 crashing by 1 day only: EST LFT 3 2 3 3 2 6 5 4 1 5 6 0 1 0 3 2 3 2 2 3 5 Duration is 6 days Total cost = Direct cost + Indirect cost = (8.22.000/This network diagram not possible to crashing further.www.300+(1x1500)+(1x200))+(2000x6) = (8300 + 1700) + (12000) = 22.000/Optimum cost = 22.com .jntuworld.com www.jwjobs.000/Optimum Duration = 6 days www.jntuworld. So that the project duration is 6 days and optimum cost is Rs.

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